Common Total c Preferred stock is cumulative participating 57778 32222 90000

# Common total c preferred stock is cumulative

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Common Total (c) Preferred stock is cumulative, participating \$57,778 \$32,222 \$90,000 The computation for these amounts is as follows: Preferred Common Total Dividends in arrears (2 X \$16,000) \$32,000 \$32,000 Current dividend 16,000 16,000 Pro-rata share to common
(5,000 X \$50 X 8%) \$20,000 20,000 Balance dividend pro-rata 9,778 12,222 22,000 * \$57,778 \$32,222 \$90,000 *Additional amount available for participation (\$90,000 – \$32,000 – \$16,000 – \$20,000) 22,000 Par value of stock that is to participate Preferred (2,000 X \$100) \$200,000 Common (5,000 X \$50) 250,000 450,000 Rate of participation \$22,000 ÷ \$450,000 4.8889% Participating dividend Preferred, 4.8889% X \$200,000 \$ 9,778 Common, 4.8889% X \$250,000 12,222 \$22,000 EXERCISE 15-12 (a) 6/1 Retained Earnings 8,000,000 Dividends Payable 8,000,000 6/14 No entry on date of record. 6/30 Dividends Payable 8,000,000 Cash 8,000,000 (b) If this were a liquidating dividend, the debit entry on the date of declaration would be to Additional Paid-in Capital rather than Retained Earnings. PROBLEM 15-3 HATCH COMPANY Stockholders’ Equity December 31, 2018
Capital Stock Preferred stock, \$20 par, 8%, 180,000 shares issued and outstanding \$ 3,600,000 Common stock, \$2.50 par, 4,100,000 shares issued, 4,080,000 shares outstanding 10,250,000 Total capital stock 13,850,000 Additional paid-in capital In excess of par—preferred \$ 260,000 In excess of par—common 27,750,000 From treasury stock 10,000 28,020,000 Total paid-in capital 41,870,000 Retained earnings 4,272,000 Total paid-in capital and retained earnings 46,142,000 Less: Treasury stock (20,000 shares common) 200,000 Total stockholders’ equity \$ 45,942,000 Supporting balances are indicated in the following T-Accounts. Preferred Stock
Bal. 3,000,000 1. 600,000 3,600,000 Paid-in Capital in Excess of Par—Common Stock Bal. 27,000,000 4. 750,000 27,750,000 Common Stock Bal. 10,000,000 3. 250,000 10,250,000 Retained Earnings Bal. 4,500,000 8. 288,000 10. 2,100,000 9. 2,040,000 4,272,000 Paid-in Capital in Excess of Par— Preferred Stock Bal. 200,000 2. 60,000 260,000 Treasury Stock 5. 300,000 6. 100,000 200,000 Paid-in Capital from Treasury Stock 7. 10,000 10,000 1. Jan. 1 30,000 X \$20 2. Jan. 1 30,000 X \$2 3. Feb. 1 50,000 X \$5 4. Feb. 1 50,000 X \$15 5. July 1 30,000 X \$10 6. Sept. 15 10,000 X \$10
7. Sept. 15 10,000 X \$1 8. Dec. 31 3,600,000 X 8% 9. Dec. 31 4,080,000* X 50¢ *[(2,000,000 + 50,000) X 2] – 30,000 + 10,000 10. Dec. 31 Net income

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